Supply Chain Plus BCD Claims First Big Casualty, As Scatec, ACME Pause 900 MW Project

Highlights :

  • In what is the first major project developer to cite hike in customs duties as a key factor behind project stoppage, the issue is bound to raise many questions from industry watchers.
  • Large solar developers have been pushing for a window for legacy projects to stay out of the coming BCD tariffs for their import requirements.
Supply Chain Plus BCD Claims First Big Casualty, As Scatec, ACME Pause 900 MW Project

Supply chain bottlenecks and infrastructural gaps are hurting the renewables sector of the country badly. In a fresh development, Norway’s leading solar player Scatec and India’s ACME have declared that they are pausing their 900 MW solar power project in India for the moment. The project was worth $400 million and was coming up in the state of Rajasthan, which has seen some of the lowest solar bids even in a tough year that was 2021.

The key reason cited for stalling the solar power project is that there are acute bottlenecks in the supply chain. Also the government has decided to raise the import duty on solar imports.

The Norwegian giant made an entry into the Indian market in 2021 when it partnered with ACME mainly to build the Rajasthan plant.

The plant, originally won by ACME,  was expected to be completed in 2022 but no work has begun until this day. Scatec says in its quarterly earnings report, “Scatec and ACME have decided to put the 900 MW solar power project in India on hold due to lack of supply of domestic solar panels and a 40% import duty on solar panels to be imposed from April 1.” For ACME, the new issues will be a reminder of the many travails the firm has faced, most of which finally seemed to be ending as it got access to fresh funding commitments, from Acme, as well as Brookfield, in 2021, But it seems the long delay in execution has simply made some of the issues intractable.

At present, India is one of the fastest growing renewable markets in the world but what has marred its industry is that most of the raw material in the solar sector is imported. This is more so in the solar power segment. India has just decided to levy customs duties on solar modules and solar cells to cut its dependence on China-made imports and boost local manufacturing.

In the Union Budget, the Central Government has decided to allocate Rs 19,500 crore to boost its solar PLI scheme to push  solar equipment manufacturing as the country seeks to deploy 280-gigawatt of solar capacity by 2030.

Last year in Conference of Parties (COP-26) under the Paris Agreement that took place in Glasgow, Prime Minister Narendra Modi has announced a five point commitment of India. One of them is to achieve carbon neutrality by year 2070; withholding of solar power projects will damage the Indian dream.

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